EUR/AUD rebounded to 1.6139 last week but failed to break through 1.6189 resistance and reversed. Initial bias remains mildly on the downside this week for 1.5773 support, and possibly below. But for the moment, we’re viewing price actions from 1.6189 as developing into a consolidation pattern. Hence, downside should be contained above 1.5621 support to bring another rally. On the upside, above 1.6139 will target 1.6189 high again.
In the bigger picture, while there is bearish divergence condition in daily MACD, there is no clear sign of reversal yet. EUR/AUD also drew strong support from 55 day EMA and rebounded. Current rally from 1.3624 could still extend to 1.6587 key resistance (2015 high). Nonetheless, we’d expect further loss of upside momentum, and strong resistance from 1.6587 to limit upside and bring reversal. On the downside, sustained break of 1.5621 support should confirm reversal and turn outlook bearish for 1.5153 support and below.
In the longer term picture, the rise from 1.1602 long term bottom (2012 low) isn’t over yet. We’ll keep monitoring the development but there is prospect of extending the rise to 61.8% retracement of 2.1127 to 1.1602 at 1.7488 and above. However, sustained trading below 1.3671 should indicate long term reversal and target 1.1602 long term bottom again.
